Last week’s Boston Globe has a story about the recent dismissal of a criminal case against two Boston city officials for their involvement with an alleged union extortion scheme designed to pressure non-union businesses to give work to members of the local Teamsters Union. (The reporters were kind enough to seek my comments for the article.) The case in Boston is notable because its outcome diverges from similar cases brought in Philadelphia and New York, which resulted in convictions.
A. Background on the Hobbs Act.
Federal indictments under the Hobbs Act, 18 U.S.C. Section 1951, for actions taken to “entice” non-union contractors and developers to hire union members is a subject matter that I have written about on this blog. The reason for my interest is not only because I represent a number of merit shop contractors and developers (as well as union contractors) but because of several recent high profile cases indicting union officials for extorting contractors and developers into hiring union members. Those in Philadelphia are aware of the indictments involving Ironworkers Local 401, which involved its use of “goon squads” and other tactics to obtain work for its members and signatory contractors. That indictment ultimately lead to the conviction of several Ironworkers, including its President. That case came on the heals of a similar case involving the Operating Engineers.
The Hobbs Act makes it a federal crime to extort or attempt to extort a business or individual engaged in interstate commerce. However, the common understanding of extortion differs from the technical meaning of extortion found in the Hobbs Act. Under the Hobbs Act “the term “extortion” means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.” (The reason for my highlighting of these terms will become clear in a minute.)
For years, because of a U.S. Supreme Court Case U.S. v. Enmons, the prevailing view was the unions and their officials were immune from liability under the Hobbs Act. In Enmons, the Supreme Court explained that a Hobbs Act violation involves two things: (1) actual threatened force, violence, or fear (means) and (2) the obtainment of property of another (ends). So, the means and the ends must be illegitimate before a Hobbs Act violation can occur. The Court in Enmons reasoned that the property that was allegedly extorted was higher wages for union members and since the union had a legitimate claim to those wages it could not extorted “the property of another.” The Court made clear that the union’s means “force, violence, and fear” could still be prosecuted under state law, but for a federal law to be broken the both elements would need to be met.
Subsequent decisions, including decisions in the Ironworkers and Operating Engineers cases, walked back the seemingly broad breadth of the holding in Enmons. Several courts noted that Enmons should be limited to its facts. Those being where a union was engaged in an active strike against an employer with whom it had an existing collective bargaining relationship. Compared to a situation, such as with the Ironworkers and Operating Engineers, where there was no such relationship between the unions and the victims.
Now, as I discuss in the Boston Globe, the federal court’s decision to dismiss the indictments against the two Boston officials and the previous ruling by the 1st Circuit Federal Appeals Court could make it harder for federal prosecutors to indict union officials or it could just further clarify the contours of the Hobbs Act intersection with federal labor law.
B. The Boston Teamsters Case: The Ends and the Means.
In United States v. Burhoe (1st Cir., 2017), the president of the local Teamsters union and an associate were indicted for extorting non-union businesses into employing Teamsters on projects. After a six-week trial, the jury found them guilty, under the Hobbs Act and related federal charges. The defendants appealed their convictions under the Hobbs Act and the 1st Circuit Court of Appeals overturned their convictions reasoning that their conduct in pressuring non-union firms to employ Teamsters did not rise to extortion under the Hobbs Act.
The Court reasoned that under the Hobbs Act both the ends and the means of the extortion must be unlawful. Thus, as in Enmons, to be guilty under the Hobbs Act the defendant must have no legitimate claim to the property obtained and his means of obtaining it must also be wrongful. The Court noted that threats of violence or physical harm are almost always a wrongful means under the Hobbs Act. The Court also said threats of economic harm could be wrongful. It becomes wrongful when the defendant has no legitimate right to the property sought.
The Court then examined the indictment as it related to the non-union firms. The indictment alleged that the defendants extorted wages for imposed, superfluous, and unwanted labor through the threat of economic harm and physical harm to the company and others. The Court then examined the underlying cases of extortion. While in each case the union officials were aggressive and blunt and threatened a picket line, the Court noted that no bodily harm or property damage was threatened or occurred.
Defendants challenge to the conviction hinged on whether the trial court properly instructed the jury on extortion. Defendants argued that the trial court should have instructed the jury that the labor was superfluous, unwanted, and fictitious. In other words, the wages extorted (the ends) would have to be in return for no show jobs. The Court reasoned that if the union members actually worked, there could be no Hobbs Act violation, at least when the pressure was limited to threats of picketing. The Court held that picketing to pressure an employer to hire union members was protected under the National Labor Relations Act (this is not correct but it was not a central issue in the case). Thus, the Court reasoned anytime a union set up a picket line to protest non-union work it could result in a Hobbs Act violation if the employer ultimately caved to the union’s demands.
C. The Ironworkers and Operating Engineers Cases.
In contrast, the federal courts in the Dougherty and Larson cases reached different conclusions regarding the intersection of the Hobbs Act and the National Labor Relations Act. These cases are also in contrast in two ways. First, in both cases, the union’s means was threats of and actual violence and property damage (in the Doughtery case the Ironworkers were alleged to have burnt down a Quaker meeting house). Second, neither court held that the wages extracted had to be for fictitious or no-show services for their to be a Hobbs Act violation.
The Larson case goes further and shows the divergence on the issue of a legitimate claim to property. In Larson, members of the Operating Engineers were indicted under the Hobbs Act – and related federal criminal statutes, including RICO. The indictment alleged that the union members sought to obtain wages and other property interests from non-union firms using the means of actual violence, sabotage of property, and threats.
The defendants moved to dismiss the indictment under Enmons arguing since the ends were legitimate the means were irrelevant. The magistrate judge recommended dismissal of the indictment based on Enmons. But, the district judge disagreed.
In contrast to the Burhoe ruling, in Larson the trial judge rejected the argument that flipping non-union jobs to union jobs was a legitimate union objective. The trial judge succinctly framed the issue in labor union extortion cases stating:
If the union acts in furtherance of a legitimate labor objective, the use of force or violence incident to the pursuit of that objective is not subject to Hobbs Act liability (although it might be subject to prosecution under other provisions). However, if a union’s objective is not legitimate, Enmons will not protect it from prosecution under the Hobbs Act.
As the Court explained, “[i]n a legitimate strike situation, the union has a lawful platform on which to seek higher wages and better terms for its members. However, when a union pursues agreements with new employers through primary tactics of violence, threats, and intimidation, it does not have a lawful platform on which to claim the property of the employer. The use of such tactics is therefore “wrongful” under the Hobbs Act.
D. Do the means matter?
Burhoe’s ultimate conclusion that a union official does not commit extortion simply by threatening a picket line is not the problem. In fact, that conclusion is probably correct. The problem for prosecutors at least in the 1st Circuit is that it concluded that the wages extorted must be for fictitious work, at least in part. In Burhoe, the Court stated “It follows that the district court erred in instructing the jury that it could find extortion where the defendants sought to obtain “imposed, unwanted, superfluous or imposed, unwanted, and fictitious work” by using “fear of economic loss,” which encompasses picketing protected under the NLRA.” The Court continued by explaining “the disjunctive construction impermissible relieved the government from having to prove that the work was “fictitious” and thus could have allowed the jury to find a violation merely because the union sought to turn around nonunion jobs to maintain the prevailing wage through such a threatened picket, and the employer did not want to use the union workers to perform the work.”
On one hand it could be said that under Burhoe is limited to its facts. Thus, when the means are limited to threats of and actual “peaceful” picketing, then the government must show that the ends were for no-show work. In other words, contrary to Enmons, the means do matter. Larson may actually shed some light on this when it held that when a union is attempting to obtain work for its members it “may [not] use an unlimited array of coercive tactics to secure such an agreement with an employer.”
However, on the other hand, if Burhoe is limited to its facts, then the Court’s analysis does not make any sense because if the ends are legitimate property then, as Enmons holds, the means to obtain it, while potential violating other laws, does not violate the Hobbs Act. So, it would not matter if the means were peaceful picketing or a threat to break the legs of an owner of a non-union firm. Therefore, under Burhoe’s reasoning any conduct, including property damage or physical harm, that results in a non-union employer agreeing to hire union members is not punishable under the Hobbs Act. As in Enmons, the violence to property and body may be punishable under state law, but the conduct does not violate the Hobbs Act.
Ultimately, this seemingly inherent contradiction in Enmons must be resolved by Congress or the Supreme Court. Before then, case law suggest the means do matter. Threatened an actual violence to person or property is going to be grounds to indict under the Hobbs Act, while aggressive behavior and threats of a picket line may prove more challenging.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
